Houston-based private equity firm The Sterling Group has agreed to sell Dallas-based Artisan Design Group (ADG) to Lowe’s Companies Inc. for $1.325 billion.

ADG is a nationwide provider of design, distribution, and installation services for interior surface finishes—including flooring, cabinets, and countertops—to national, regional, and local homebuilders and property managers.

The Dallas company operates 132 distribution, design, and service facilities and coordinates installation through over 3,200 personnel across 18 states.

“We’re thrilled for ADG to join forces with Lowe’s,” ADG CEO Steve Margolius said in a statement. “Our leading position in flooring, cabinets and countertops, combined with Lowe’s scale and category breadth, will allow us to continue on our growth trajectory while providing an even more differentiated and comprehensive offering to the builders and property managers we serve today.”

Lowe’s said it will finance the acquisition with cash on hand.

Growth targeting new home construction

ADG will expand Lowe’s Pro offering into a new distribution channel within a highly fragmented, approximately $50 billion market, the company said.

“With more than 18 million homes needed in the United States by 2033, we expect new home construction will be a major driver of Pro planned spend for the next decade,” Marvin Ellison, Lowe’s chairman, president and CEO, said in a statement. “The acquisition of ADG allows us to build on our momentum with Pro planned spend and is expected to expand our total addressable market by approximately $50 billion.” 

Ellison noted ADG’s excellence in serving customers.

“With its strong, customer-centric operating model, ADG has become an industry leader with best-in-class customer satisfaction scores from the top builders in the U.S.,” he said “We look forward to welcoming the ADG team to Lowe’s, and, through our combined capabilities, enhancing our offering to our expanded Pro customer base.”

The transaction is slated to close in the second quarter of this year.

ADG has made 15 acquisitions since 2018

“Since initially partnering with co-founders Larry Barr and Wayne Joseph in 2018, Sterling has been proud to support ADG during a period of significant growth and expansion,” Johann Friese, director at The Sterling Group, said in a statement.

Under Sterling’s ownership, ADG has completed 15 acquisitions, each of which was founder or entrepreneur owned. Sterling said it has a 40-year history of partnering with founder- and family-owned industrial businesses.

RBC Capital Markets is acting as lead financial advisor to ADG. Goldman Sachs is also acting as financial advisor to ADG. Latham & Watkins LLP is acting as legal advisor to ADG.

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